What can business learn from the Wagner Group mutiny in Russia?

There are important lessons for business leaders from the debacle that Russia found itself in with the Wagner Group, writes UNSW Business School's Mark Humphery-Jenner

Wagner Group and its leader, Yevgeny Prigozhin, staged a spectacular mutiny in Russia, capturing Rostov on Don before marching on Moscow. Prigozhin is now in exile, and his future is uncertain. The Russian Ministry of Defence (MoD) looks even more incompetent.

Let’s be clear: there are no ‘good guys’ here. Prigozhin is brutal and unpleasant. The MoD has waged war on Ukraine and committed war crimes in so doing. But, we can learn important lessons – even from abhorrent characters on the world stage – in the world of business.

In this scenario, Russia and Putin had a talented (albeit flawed) worker (Prigozhin) who was railroaded by controlling division managers (such as Sergei Shoigu, Russian Minister of Defence). Prigozhin could not appeal what he saw as absurd, unjust and incompetent decisions. Prigozhin thus revolted, viewing it as better to gamble it all in a fit of pique than to be squashed under the boot of ineffectual bureaucrats and managers.

Let’s explore how we got here and what business managers and leaders can learn.

Read more: How leaders can develop strategic mindsets for uncertain times

A classic management failure

Let’s start with Prigozhin himself. Prigozhin was reportedly a successful manager. He developed logistical and people-management skills in catering, being oft-derided as “Putin’s chef”. But wars are won and lost on logistics and morale. And these skills seemingly served him well as the founder and leader of the Wagner group.

Wagner was reportedly responsible for many Russian victories in Ukraine, even though it was never designed for such warfare. He undoubtedly saw himself as successful and valued his financial wealth, which he seemingly perceived as justified on the back of his ambition.

Wagner and Prigozhin might be brutal, nasty and murderous. However, they would regard themselves as high achievers and were seemingly important tools in Russia’s military arsenal.

The catalyst for his revolt has become clear: Prigozhin was losing power. It is reported that the Russian Ministry of Defence wanted to seize the Wagner Group and merge it into the regular defence force. This would have been a hostile acquisition with no compensation. Prigozhin, too might have been eliminated. The MoD had reportedly cut Prigozhin’s communication lines to Vladimir Putin, seemingly heading off his avenue of appeal.

And this is where we find ourselves: a successful ‘employee’ (Prigozhin) was having his pet project seized. Other people were trying to take credit for his work. Middle managers were attempting to undermine his wealth and exert control over things they never had control over in the past – and never would have had any right to control. Unsurprisingly, Prigozhin rebelled. He no doubt realised that if he were going to lose Wagner, he would at least damage the MoD in the process.

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UNSW Business School's Mark Humphery-Jenner says effective management entails respecting employee autonomy, avoiding dictatorial bureaucracy, fostering a growth mindset that incentivises employees, and prioritising genuine care and value for employees to prevent rebellion. Photo: Supplied

What can business learn?

The lessons for business and for leaders are numerous and manifest. Divisional leaders and middle managers tried to excessively control a talented employee. They seemingly wanted to seize a successful project, taking the credit for another person’s work, and apparently wanted to control everything, leaving nothing on the table for anyone else. What could they have done differently?

Hands off: Do not let middle managers, bureaucrats, or HR interfere excessively with your employees. This includes – but is not limited to – interfering with employees’ private lives. If an employee has a side hustle in their private time, then good. Those employees are building skills that can help your business. They are often ambitious and talented. Do not interfere with it. Do not attempt to control everything or view your employees as indentured servants. You will infuriate the employee in question. They will leave and excoriate the company on the way out.

Avoid dictatorial bureaucracy: Prigozhin found himself in a Kafka-esque nightmare. The MoD was seizing his company (at least in his eyes) and he could not appeal. He had to watch passively as this occurred. The mutiny would have been less likely if appeal lines were open, but he could not speak rationally and logically to a superior to overrule the decision. The clear lesson is that companies should not give untrammelled authority to middle managers. Decisions should be able to be appealed and those appeals should be just.

Grow the pie: Companies should have a ‘pie growing’ mentality. Here, the MoD wanted to control everything, leaving nothing on the table for people such as Prigozhin. This is a mistake. It is better to leave money, assets, or prestige on the table for employees (here, Prigozhin) to incentivise them to create more value. It is better to have 90 per cent of a large pie than 100 per cent of a small one. The MoD, in its attempts to control everything, failed to realise this.

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Care about employees: Prigozhin might be a murderer, but he purports to care about his solders. He obviously cares about himself. However, the MoD (seemingly) is happy to send troops into the meat grinder. It was inevitable that there would be a rebellion. It was even more inevitable that other employees – soldiers in the MoD – would do nothing to stop it or to talk Prigozhin down. Treating employees as disposable is not a good way to engender loyalty.

Business can learn from this whole situation. To be clear, this is not designed to paint Prigozhin or Wagner in a sympathetic light. But, that does not mean we cannot learn from the debacle that Russia found itself in.

Mark Humphery-Jenner is an Associate Professor in the School of Banking & Finance at UNSW Business School. He has been published in leading management journals, and his research interests include corporate finance, venture capital and law. For more information, please contact A/Prof. Humphery-Jenner directly.


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